Sparks fly even before actuary reviews pension plans

Ward 9 Councilman Steve Merolla is going to get what he wants – the city’s actuaries will appear before the City Council Monday night. Merolla said Tuesday he has plenty of questions, but added it might be more productive if the information they are working from is current and not three and four years old.

The latest development in what has become a debate of whether the city is capable of addressing its unfunded pension and health care liabilities, as the administration says, or is headed in the direction of some other Rhode Island municipalities, came up last Friday. On Friday, the administration scheduled its actuaries, Gabriel Roeder Smith & Company, to be in Providence to address the State Pension Review Board this coming Monday.

According to the mayor’s chief of staff, Mark Carruolo, the city was given several dates to appear before the review board. When one of them coincided with a council meeting, it presented an opportunity, as he said, “to kill two birds with one stone.” The mayor figured Joseph Newton from the Irving, Texas company could also be available to answer council questions.

This caught Merolla by surprise. Merolla’s resolutions to have the actuaries come before the council have not been signed by the mayor. Avedisian reasons it would make more sense to have actuaries visit the city when they are here anyhow and their expenses can be shared rather than on separate dates.

“We’re looking forward to them coming,” Merolla said Monday, “but we don’t have an actuarial report. How do we have a meaningful discussion unless that’s [the administration’s] intent,” he said.

Merolla’s claims touched a raw nerve with Avedisian, who observed Tuesday that the council has had the reports since July 2011 and that, in fact, they are also posted on the city’s website.

“If suddenly he realized he has a document he hasn’t looked at all this time, that’s his problem,” Avedisian said.

The 2011 report on public safety pensions, based on the performance of the pension plans for 2009 and 2010, projected pension contributions for the current fiscal year. Those contributions, which the administration has budgeted, are $14.2 million for Firefighters/Police I plan; $5.2 million for the Municipal Employees Retirement Plan; 26.59 percent of the employer portion of payroll for Police II and 24.67 percent of payroll for Fire II.

The reports show that the Police II pension has an unfunded liability of $21.9 million; Fire II, $7.9 million; and Municipal employees, $35.7 million. The granddaddy of the bunch is the closed Police/Fire I plan with an unfunded liability of $242.1 million.

Merolla didn’t back off when informed actuaries would not be providing any new reports at this time.

“It’s a cute move on their part to report on a report that’s two years old,” he said.

To that end, Merolla reasoned it might make more sense for the actuaries to come back when they have their most recent report in another couple of months.

“I would like to have them come back. Why pay them for now when it doesn’t make sense,” he said.

Merolla contends the issue of unfunded pension and retiree health benefits is a “huge” issue that has the city on the hook for “hundreds of millions.”

“This is the largest expenditure the council has to look at,” he said, adding that the council has not had the opportunity to question the actuaries since April of 2011.

“We haven’t received any information,” he said. Yet, he added, “No way are we paying to come if we’re going to get up to date information in three months.”

Carruolo said the actuaries would be back in the spring with their report on the municipal pension. The city schedules actuarial reviews of the pension plans on alternating years with municipal being done one year and public safety the next.

Further, Merolla says the actuaries will only be addressing the issue of unfunded pension liabilities and not the bigger issue of unfunded retiree health care costs and other post employment benefits.

Nonetheless, Merolla said he would have questions for the actuaries. For starters, he said, he wants to hear how their projections have fared. He also wants to know, with all the payments being made, why unfunded liabilities have not dropped more.

Merolla says the council questions have already paid off. He said that, following the council’s questioning of the city’s projected rate of return on investments of 8 percent, the actuaries dropped projections to 7.5 percent. He said that action, which triggered higher employee contributions, saved the taxpayers millions.

But Merolla says he’s concerned, even though Warwick’s situation can’t be compared to Central Falls, Providence, West Warwick and other municipalities.

“Everyone is saying Warwick is better off. It’s like saying we have stage two cancer and everybody has stage five. I don’t want any cancer,” said Merolla.

“If that’s his perspective,” Carruolo responded, “he’s been on the council for 14 years and it doesn’t say much for his effectiveness.”

Comments

Interesting. Moody's just issued a "NEGATIVE" outlook regarding Warwick's financial viability. One of the reasons stated being the continued underfunding of the locally administered pension plan - Police and Fire 1. Oh, wait a minute, there must be something wrong here, didn't the Mayor just highlight how well the city is doing by proclaiming he had just received an "Unqualified Audit Report"? This should show everyone, employees, retirees, and property owners, that they have to pay attention and question this administration regarding how it is handling the finances of this city. Hiding the huge unfunded liabilities that this city faces will back fire. Putting the information on a web site is NOT LEADERSHIP and DOES NOT face or set a different course for this city.

If you want to see where all of the money is going and to each individual, go to this link. It lists every person collection a pension in Warwick and what the long term financial impact is. The figure is much more that is reported. What is also of interest, is how many family members are collectiong disabiity. This report clearly shows the facts, the cronyism, and devastating impact to Warwick. Link is as follows:

I went to the city website and looked at the pension studies.So the info is available. From my review it seems that they are based upon actual data with estimates going forward. By reading them I think I know more than councilman Merolla. Its hard to believe he's been on the council for 14 years and doesn't seem to have a firm grasp on the issue.

@GordianKnot. Having been at numerous Council meetings I believe that I can safely say that councilman Merolla DOES have a firm grasp of the issue. He has on numerous occasions requested the Mayor to come before the council to explain what actions he plans to take regarding the significant liabilities facing this city. By the way, the Mayor has been in city government for 20 years, 12 of those as Mayor. Bottom line, each time Mr. Merolla has questioned the sustainability of the pension and other liabilities he has been outvoted by others and the Mayor has questioned why, as if everything was good and under control. NO, councilman Merolla has provided leadership on the issue. It is the Mayor who is posing as a leader.

Time to fix police 1. Do anything with that but status quo. The rest I think can be managed better but are at least not out of control. The bond market is very bad right now with no signs of much improvement. That has to be looked at closely because the returns will be there !! Way below what has been predicited. Look at the bond market you will see the real concern that those numbers may actually be low !

just looked at what they were making..... looks like teachers retire with more of a pension. I actually thought those numbers weren't that bad for yearly pensions..... some were only like 17,000 a year.. up to 40 k for Captains and Majors..... am I missing something ?

Councilman Merolla and Councilman Solomon have provided the leadership in terms acknowledging that this is a significant issue that will affect the long term financial health of the city and all the people who live and work in Warwick.

For years they as well as I have been seeking information regarding how the taxpayer in this city will be able to pay for these expenses. Every step of the way, Mayor Avedisian and his lackeys have put up road blocks so that the proper analysis and modeling can’t be developed to forecast spending projections and revenue projections short term and long term.

Why wouldn't a CEO want to see these numbers? Maybe it’s because if you’re running a company like Enron, you do not want the real facts to expose the house of cards that has been built up. These numbers will expose the Avedisian fallacy and provide a real glimpse when that house of cards will come crashing down. By that time Mr. Avedisian will be gone from Warwick politics and his plan to let the time bomb explode of the next administrations watch will occur.

Will Steve D. be coming out on Monday? We have all been subjected to his rants over the years....now time to put up or shut up. He has had all the answers on pensions. Steve D...dazzles us with your brillance.

To STEVED: you really need to sound alarm to your co-workers regarding this point.

Last year I testified at the budget hearing and objected when Chief of Staff, Mark Caruolo described how the administration has been advised by the city actuarial experts that if they negotiated “frugal” contracts it could help reduce pension liabilities. The result - three years with no raises for all city employees.

My objection, and you can listen to the testimony as it is on the city council web site (refer to May 31, 2013 part III audio at position 2578) was that it shouldn’t be a policy of the administration to realize pension savings at the expense of active employee.

For more proof of the deceptive tactics by this administration, here is an excerpt from the November 8, 2012 letter from Gabriel Roeder Smith & Company (GRS), city pension actuarial experts, outlining Warwick’s “Funding Improvement Plan” for the Police I/Fire I pension plan. (This document will be discussed before the state pension commission and the city council on Monday March 11). “One factor that is expected to help dampen the growth of the liability is a recent agreement for minimal to no salary increases for current active members for the next three years. If the three-year pay freezes are realized in future valuations, the City contributions into all of its pension plans could be lower by as much as $5 million per year when compared to current projections”.

So my final point is this: The union presidents are not going to allow the administration to continue to screw their membership by negotiating future contracts with no raises as a remediation policy to cut pension costs. So what is the possibility of this pension reform assumption continuing in the future? ZERO!

But why include it in this improvement plan? Because it provides another illusion that Mayor Avedisian and Mark Caruolo have a viable plan to fix the problem.

What am I gonna sound the alarm about. City already takes 15 percent of my pay a week for pension ( next year 16.5 I think), that's why our pension is second best performing in state (almost 90 percent funded). I already pay 20 percent for healthcare ( btw I don't go to the hospital). What more do you want out of the city worker?

Steve, Mayor Avedisian is asking Warwick taxpayers to pay $300 milllion more in the next thirteen years into the Police I/Fire I pension plan. The current liability is almost $311.7 million. At the end of the 13 years the liability will be $307.1 million. What kind of plan is that? What affect will this have or employment levels and all other budgetary items in the city. We do not know because Curolo and the Mayor don't want to find out the answers.

You are contributing more of your pay check to the pension and the administration policy is to not give you a raise for as long as they can. Read my last post. That's what the experts are telling them to do. And they did it in the last contract.

What group is missing from this discussion? The retirees! When are the union Presidents going to demand that the Mayor bring in the reitred members to discuss, for example, a suspension of COLA payment? If the active union members start to make some noise maybe this could happen.

The Providence Fire Union President met with the retired firefighter and they agreed to suspend the COLA's. Your COLA has been suspended for three years while Police II and Fire II retirees are getting a 3% compounded raise over the next three years. That's not fair.

I understand, again what do you want from me, I have nothing to do with Police and Fire 1 plan, I am not a retiree, nor will I be one soon. It's not my job to round up the retirees and tell them sorry we can't pay you. That's up to the mayor. Again, I'm not saying there isn't a problem. I'm not the one to solve it. I wasn't hired to figure out the cities finances, I was hired to protect people and property and that's what we do.

Steve, it will effect you in the future. No one is casting blame on you for the problem, however, seeing the facts, and the math doesnt lie, you (and your members) need to take a public stand, hold the leaders responsible and ask questions. With the tax burden going to skyrocket, there will be no money left for anything else. Also, 20% for healthcare is a gift, it should be no less than 25%.

Healthcare at 20% is a fair deal for everyone. I don't go to the hospital ever, so while the city takes its money ($280 a month) the only thing I cost them is the per person fee BCBS charges to maintain the plan. Plus and I'm not complaining, but don't you think decent health insurance for workers that get vomit, feces, blood, spit, etc.. on them is fair.

I AGREE Steve with the decent healthcare. But decent and fair are 2 different things. Everyone inthe private sector is paying much more for much less of a plan. In all honesty, when was the last time you got vomit, blood, spit or feces on you? What you need to understand is that we are not against you. Whatever promises were made to you, there was no taxpayer at the table to disemminate the info to see if it was realistic. Here is a question. Do you think that if someone contributes $25000 in pension payments during the history of their employment that they should be able to recieve 1.7 million in benefits. Yes or no. I await your response.

You are all arguing about whether the deck chairs should be blue or yellow. The fundemental question is: Why do public sector pensions exist in the first place? i.e. Why are taxpayers on the hook for public employees throughout their life expectancy? Yes, the simple answer is that it's contractual. However, until the city transitions to a defined contribution plan vs. the existing defined benefit plan, this issue will not go away. Taxpayers should be responsible to pay governmentl workers a reasonable wage. The same taxpayers should NOT be responsible for government workers fourty years after they retire.

No according to your numbers I do not think that's fair, that being said contributions are much more than $25000 and I don't know who's collecting 1.7 mil ( not saying it isn't true, I just haven't seen it. Also for the blood, crap, spit... It happens to us every day, I'm not blowing smoke up your rear, on a daily basis people are coughing directly into our face, we have multiple CPR calls a day and when your doing chest compressions while someone is aspirating all over the rescue its not pretty, we get blood on our clothes daily and you'd be very surprised at the amount of crap we see. I could tell you stories that would blow your mind and they happen all the time. Feel free to ride with us on any day and se what we get to deal with. Again not complaining just telling the facts. I think most of the public have no clue what our rescue calls consist of...

Steveie D, we understand that and appreciate it. However, you have to remove the emotional issues when talking about finance. If my child was trapped in a burning car (god forbid) and you came to the rescue, the emotional part of me would want to give you a billion dollars. However, we cannot discount the fact that after the emotion is removed, we must deal with what the tax base can afford. Now, in Warwick, the tax base istotally stressed and that is precisely why we are loosing population. Face the facts, the party is over as the math does not work. My personal opinionis that the people who raided your pension fund and set it up based on ficticious rates of return, belong in prison with Bernie Madoff. But you guys havent taken care of your own business and concerns and have let others brain wash you. What is really troubling is that you havent learned from Central Falls. Steve, Warwick is bankrupt, they are just hiding it. You guys should be the ones asking questions. Why havent I ever seen one of you ask a question?? Really, why? You get retards like Mike Matteson that go to council meetings and act like Tony Soprano, scream and yell, make fools out of the dept., but not one of you asks a legitimate question. Why?

The site I sent you to. To answer your question. I just left a meeting discussing your question. When you go to the site and click on an individual name, 3 charts come up. yOu have to add the 2011 payments to retirees by final employer, and the value under 2011 annual pensions. In other words, that value is doubled. There is some glitch that we are trying to figure out but it has been confirmed. for example, when you click on David Delbonis, the value states $24, 032 for 2011. It is actually double that for police and fire under normal retirees. Hope that helps but more info is coming.

The site I sent you to. To answer your question. I just left a meeting discussing your question. When you go to the site and click on an individual name, 3 charts come up. yOu have to add the 2011 payments to retirees by final employer, and the value under 2011 annual pensions. In other words, that value is doubled. There is some glitch that we are trying to figure out but it has been confirmed. for example, when you click on David Delbonis, the value states $24, 032 for 2011. It is actually double that for police and fire under normal retirees. Hope that helps but more info is coming.

Know what I see? This issue is finally gaining traction because of a handful of dedicated individuals! Also, I read posts by SteveD and he seems to understand the problem is real. This is real honest progress for our community. The payers, and receivers are starting to move to the same place - truth. And this is despite the mayor and most of the council hoping the issue would go away while they take care of their own priorities. Thats only human for politicians to do, but it takes others making noise to wake them up to things. The mayor and council are running out of opportunities to avoid this major, MAJOR financial burden that needs a real solution. And cutting services while raising taxes will NOT do the job. SteveD is right that 20% copay, zero raises, and 16% pension contribution is getting to be as much as we can ask from current city employees. So we may as well face facts. Taxes wont solve it. Cutting things wont solve it (or be acceptable to voters), and you cant hit current employees for much more. THE ONLY LOGICAL WAY OUT IS TO CUT PAY OUTS. No one wants that, but it is the ONLY way forward. End cola's is step #1.

Here are some other changes that need to be made to stop the inevitable bankruptcy of the city.

1. No one, that is no one, begins collecting a pension prior to the age of 62 - 65 ish. Currently we have hundreds of people collecting pensions after retiring in their 40's. The system was never designed for that.

2. No more free health care for ANYBODY. Everyone must pay into it.

3. People that have retired and taking a pension and working in other state or municiple jobs must forefit their penisons until the age of 65 or come up with a lump sum payout. For example, I know police officers that retired at the age of 42 - 45 began taking a pension and then went to work for another police department or the capital police. That has to end and there must be some type of remedial remedy to cut them off from the trough.

4. Sorry Steve, not personal, but minimum manning has to end.

5. NO ONE gets 14 paid holidays. Federal holiday's only should be paid. If the stock market is open its not a real holiday.

6. Sick time buy backs need to end immediately. And amount of paid sick days needs to be adjusted.

7. Accountability in every department and the fat needs to be trimmed as there is alot of it.

8. Defined benefit pensions need to end and all pensions must go to a 401k plan / annuity. The city will match 3 - 5% of the individuals contributions just like the successful business do in the real world.

9. The unfounded disability pensions that are clearly fraudulant need to be prosecuted and ended. Time to send the message. Additionally, if your hurt on a part time job that is not city related, you get no disability from the taxpayer.

Thats all I'll post for now because I know it will not sit well with everyone. But the simple fact is, is that this community is suffering urban decay, the pensions are destroying us, they are not realistic, they are based on ficticious returns, there is no money for capital improvements. The fat lady as sang boys.

One question fence man. We have mandatory retirement at 60. If we can't collect till 65 what do we do? Sounds easy to say go out any get a job for five years. Whose gonna hire a 60 year old with one area of expertise. And I'm sure you don't want a 65 year old climbing a ladder trying to pull you out of a fire. I disagree with minimum manning. We are staffed at rock bottom levels. The cities ISO rating is determined by those levels. Do the research to see what your insurance would go up if trucks were shut down. If you have info on fraudulent disabilities call the state police, until then don't call it fraud. If its fraud report it.

Ok Steve, so make it 60 before you can take the pension. I agree. Look how many guys aer getting in ther 40,s. We will always disagree on minimum manning, lets just agree to disagree. Disabilities, just listen to Oscar Sheldons comments at the last budget hearing. Thee system is plagued with fraud.

In a response to an earlier comment I was told that councilmen Merolla was providing leadership on this issue. Well, I was told leaders lead by example. He complains about pensions and healthcare for retirees while for a part time job he has full family healthcare benefits now and will have a pension and recieve full family healthcare when he leaves the council. leadership, what a joke. I've read stories when he was asked about it and he said he deserves the pay and benefits because he's a board of director of a 200+million budget. but someone who works 30 yeaes doesn't deserve it. This is what is wrong with government. Two faced self serving policians. Fulltime benfits for a paert time job and a pension with full time healthcare benefits. What a joke.

BY getting elected for 3 terms. If I am correct, former councilman Cushman put forth a resolution to ban that and then the unions came out against him and continued to elect individuals who benefited their agenda. Now, I certainly dont approve of ANY lifetime healthcare for anyone, part time , full time, elected official or not. So now it becomes up to the tax payer to get their council member to put forth a resolution to change the rules and cut off the healthcare benefit. Who will be first to do that?? Any union members??

Fenceman, if there are fraudulent pensions come out with the info. Don't just say there are and not have one ounce of info to back it up. I am firmly against a city coucilor getting and lifetime benefit. Do you have a number of fireman in their 40s getting pensions? Keep,in mind the city determines weather you can work or not they have three doctors that have to agree. There are guys that want to continue working but are told by the city it's too much of a liability for you to work. Please give me a number of fireman that retired in their 40s.

Maybe I'm missing something, if its fraud they should be arrested. Maybe ask Oscar why no ones been charged, maybe he is just making allegations? Either way, if someone is breaking the law they should be punished. I won't be at the meeting as I will be working (or as you guys like to put it, sitting on my rear doing nothing). I want some answers also. Numbers won't lie.

Oscars public answer was that it was too costly. Since you will be working, who has the department assigned as a representative to ask questions pertaining to the liabilities. What questions will they ask? Have you guys spoken about it and come up with a plan to ask questions???? I am sure that you have read the data as it is well publicized. Do you, yourself, personally, feel that it is reasonble for the thaxpayers to pay 537 million from now until 2032, on a 311 million dollar debt, and still have a 120.1 million dollar unfinded liability. 2032 is when the fund comes out of critical status to 60% funding, IF, there are no more people hired, there are no more raises, and the fund gets 7.5 interest uniterrupted from now until then. Thats what the document states. Bear in mind since 1995, there has not been any 5 year period where the fund has realized 7.5%, let alone a 20 year period as this new "fix" proposes.

I'm not a spokesman for the department. I'm not a executive board member, if they choose to ask questions I'm sure they will be productive questions. I myself feel as though the city has an obligation to follow through on a CONTRACT. Let me reiterate to you I have nothing to do with the poorly unfunded plan, maybe you should round up the city officials that took the money and failed to put one cent into the plan. My plan is doing very well. I'm not worried about that at all. Bottom line we wouldn't be here had they followed through in the cities end.. And Oscar can complain all he wants its his rules that must be followed for a disability pension to be awarded. You haven't answered my question on how many firefighters retired in their 40s? I'm waiting....

Steve D.....I can read but I tried of reading your observations......I want to listen to you speak at city hall finally......we can all listen to your pronouncements a few days afterwards on city hall website.....put up or shut Stevie.